The citizens cannot stand for stupid money

 

 
Jacob Wallenberg
The citizens cannot stand for the stupid money

Andreas Cervenka

Reporter and economic commentator

This is a commenting text. Analysis and positions are the writer's.

Updated 20.37 | Published 19.56

After many rounds, the Swedish state has liquidated its ownership in SAS. Photo: Terje Pedersen / NTB

"I think the issue is urgent".

It is March 2020 and Jacob Wallenberg, chairman of the board of Investor and one of the most powerful men in business, is meeting with then infrastructure minister Tomas Eneroth. This applies to the airline SAS, in which the Wallenberg family has had ownership interests since its inception in the 1940s. The pandemic has hit and therefore SAS needs money from the taxpayers, according to Jacob Wallenberg. Quickly.

On April 5, he returns with a new text message, this time to then finance minister Magdalena Andersson and industry minister Ibrahim Baylan, which he begins with "Sorry to bother you".

Now the language is a little more debt collection-wise and the message also contains a warning that "concrete measures are urgently needed or Sweden will soon lack its own air connections to the rest of the world", according to the SMS that Dagens Industri later came across.

Undeniably an "offer" that is hard to refuse - act immediately or Sweden will turn into a horse and cart country!

The threat is, it turns out, a hoax. But the politicians go for it.

In 2020, the state pushes to almost 5 billion and increases its ownership in SAS considerably.

Curiously, Wallenberg's own concern for the vital airlines seemed to have cooled somewhat when it came time to pay - the Wallenberg foundations halved their ownership in the same vein.
On August 13 this year, SAS was delisted from the stock exchange. The Swedish state has, after many trips, liquidated its ownership.

Despite that, the air connections between Sweden and the rest of the world seem to work just fine.

Other owners willing to finance the operation have taken over: a consortium led by finance company Castlelake and aviation giant Air France-KLM, as well as the Danish state.

All that remains for Sweden are the bills. The last state interest in SAS consists of a loan of 4 billion. The other day DI reported that taxpayers cannot count on getting back more than 94 million.

Since 2009, the state thus appears to have burned in the order of 12 billion kroner to keep SAS alive.

The money has been pushed in rounds in various forms and always after alarmist rhetoric about what will happen if the state does not step up.

For 12 billion, Sweden's entire adult population could have been offered a return trip to London - if it was the flying itself that was important. The same money would have been enough for a whole new train - the sum can be compared to SJ plowing down a total of 19 billion in an ongoing investment program.

Certainly there are situations where the state should step in and take on risks to support companies. But the basic condition is that the activity is socially important and that all other possibilities have been exhausted.

Otherwise, it will simply be a bit unfair. So far this year, 6,600 companies have gone bankrupt in Sweden, an increase of 35 percent compared to last year. It is not a bold guess that one or another of these would be more than happy to receive a penny from the Government Office.

It is not surprising that private companies that have difficulty getting their finances together go under and may be resurrected in a new guise or replaced by others. It is usually called the market economy, and is something that Swedish politicians are strong supporters of.

After all, large parts of welfare are part of this market.

But there is a difference between companies and companies, and it is hard not to suspect that those who have SMS lines directly into Rosenbad have a slight advantage.

An example is the car manufacturer Saab.

“Should I play Monopoly with taxpayers' money and invest it in such an uncertain business? The answer is no," thundered Maud Olofsson when she was minister of economic affairs in 2009.

In 2010, the state nevertheless issued a guarantee for a loan taken by Saab from the European Investment Bank EIB. At the time it was said that the risk was low and that the state was "with and guaranteeing projects that will give us a greener vehicle fleet", according to Maud Olofsson.

When the smoke settled after Saab's bankruptcy, it ended with a loss to the state of 900 million.

In the financial industry, the expression "dumb money" is sometimes used. It's about investors who are implicitly considered to be a little behind the float and are therefore at the top of the list when polished bankers have to raise capital for wobbly business plans.
 

Unfortunately,  there are some who point out that the Swedish state is now considered such a weakly gifted wallet.

 
Right now, venture capitalists and industrial companies are queuing up to get help from the government. Guarantees of tens of billions have already been issued to companies in the green transition such as Northvolt and H2GS and according to media reports, the sum may soon grow to 70 billion as more companies want to get involved. Just as in the case of Saab, it is about rock-solid money. At least officially.

It is entirely possible that these enormous commitments are entirely reasonable, but with the Saab and SAS debacle fresh in our minds, it appears important that those who are responsible for the guarantees - Swedish taxpayers - first get a proper review of the risks.

I think the issue is urgent.